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Challenges faced by companies and the support of software

Challenges faced by companies and the support of software

The majority of the large to medium business enterprises has by now shifted from the era of mere Accounting software to a world of the ERPs. Not even a single organization would comment that the pre era was better and every firm has comprehended that an ERP could benefit the business management process immensely. Today, we see a trend that even small organizations are entering the league either with a cost effective international ERP or with a locally developed software solution. Whatever the choice of the organization, the key objective of the enterprise is to streamline the daily operations of the organization so that business is conducted smoothly and right information is available at the right time to take timely and quality decisions and thereby actions.

In this document, six critical challenges faced by a business organization mainly today are discussed and then, as to how a superior quality international software can handle the same on behalf of the organization will be reviewed. The important factor is that these are the same challenges any business goes through even under NORMAL conditions but today they have the same need much more deeper in the NEW NORMAL since organizations have to first ensure their base business in the short term.

 

Five key Challenges faced by organizations deeply today

  1. Turnover has reached the saturated levels and there is no any more room to increase the sales in the existing market with existing products
  2. Diminishing Gross Margins due to cut throat competition and finding no way to increase the same
  3. Ever rising general overheads and management information is not properly organized to critically review the same periodically and take necessary actions
  4. Long overdue debts and a high potential of doubtful debts becoming bad debts
  5. Stock keeping units are held for a long time due to wrong forecasts and unsellable conditions which have a serious impact on the bottom line

 

Support of a Software to address the above challenges

  1. If a company wants to get more from the existing market with existing products, a company needs to dive in to many aspects of sales information in real time depending on the type of the industry they are in. It could be Customer wise sales, area wise sales, region wise sales, customer wise product category wise sales, customer group wise sales, customer wise and region wise product group wise or SKU wise sales and many more such other permutations and combinations to understand the actual market realities. This need can be well served only by a strong Sales Management module of a business software which has quick analytical capabilities. This is also common for businesses with long sales cycles to analyze not only sales numbers but also analyze sales leads patterns with the support of a CRM module.

 

  1. Gross margin is the key on your sales numbers since that gives you the return to the organization. Your markup decision is key in order to make the right Sales with right Gross Profit. In a large scale item list, there can be items whose margins can be increased without having any impact to the sales volume or sales operation cost. Also, you may find these opportunities differently in various regions to have better margins in a non-regulated industry. True, all this information can be generated in to an excel sheet as a report even from a good Accounting software coupled with inventory management and item wise sales management. However, the challenge for the companies today is the availability of this information in real times as and when they want in the meeting rooms. Only a proven ERP can handle this challenge with required analytics like quick reports, dash boards and KPIs.

 

  1. Cost control is the buzz word in the current sphere and whoever who is engaged in this exercise becomes the unpopular person in the organization. Yet, it has to be done by somebody and it is a dire need of the day since it has a direct impact to the net bottom line of the organization. The challenge is how you can do the same collaboratively without directly targeting official cash streams of employees. In this domain, an ERP can introduce many systematic controls prior to cost commitments by the employees which will have an approval process in the system. Further, many deep analytical information can provide real time insights in to the very productive cost control aspects.

 

  1. Overdue and Doubtful debts are straining cash flow management of the organizations while Bad debts are killing the businesses. In the best interest of the business or as an industry practice, organizations have to offer credit to customers sometimes without any guarantee or above the guarantee level which is a critical risk taken by businesses today. Follow up is the name of the game when you want to control credit especially in a homogeneous products market. Not the Monthly or weekly but the daily or twice a day follow up of overdue and doubtful debts are a critical exercise in this process. In order to better manage the overall credit, one needs to follow up even the regular ones before they become overdue. For this exercise, an operational Finance or a Sales Administration team has a tedious task to play with real time solid information and analytics to work with sales teams, directly customers and superiors of the organizations to collect such debtors outstanding before late.

 

  1. Excess investments in to stocks is a crime committed by an organization like challenge no. 3 since it is solely done by the organizational decision making process. Challenge no. 1, 2 and 4 can be understandable to some extent since they are to be done in the market with customers. However, when it comes to inventory for sales purpose, the purchase decision is taken by the organization based on the available information at the time of placing the order. There are many aspects of inventories to be looked at when placing a new order to bring down the new stocks for sale. For eg, Current stock level, Pending orders of the items, Lead time of the Items, Recent Sellable Returns not yet GRNed, Last 6 six months sales averages, next three to four months sales forecasts (which is a risk factor again), Company’s stock holding policy, Special issues or delays of the supplier, Company’s Re Order Level, the availability of complementary and substitutable items in the range, slow moving inventory of the items, Recent special sales volumes happened due to a special campaign, specially confirmed orders from customers and so on and so forth. So, Procurement Manager or Officer has to go through a serious thought process to prepare a new order for each item especially if they are different in nature, sourced from different suppliers, nations etc. What if an organization can process this decision making process for the order through a business software with a lot of analytical information to support the decision subsequently. Further, even the existing slow moving and non-moving stocks can be well analyzed through past sales behaviors in terms of sales persons, customers, regions, bundled selling schemes etc. so that a better option can be selected and pursued to clear the old stocks which is otherwise a strain on the working capital of the organization. The above analysis can also be well done with the support of a high powered business software.

 

The above mentioned Five key challenges for any business organization under NORMAL or NEW NORMAL context have to be well managed through a high level analytically capable business management software like SAP Business One and SAP Business By Design for Medium sized enterprises and SAP Business One Starter Version for startup and small businesses which offer the companies not only a simple ERP but a platform of world’s best practices together with many other options of the digitization journey such as mobile technologies, cloud technologies, Analytics, Database technologies, IoT, Big Data, Machine Learning etc.

 

If you are a startup, small or medium sized organization, invest and grow not only with Global products and suppliers to conduct the business but invest in a fully Integrated Global Business Management Software platform so that your growth is ensured with the world’s best management techniques.

Ajith Perera
COO – PBSS Group
ajith@perfectbss.com

 

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